Two fi shermen have to decide how many fish to catch from a common pool resource. The amount of sh captured depends on their effort level. That is, the total output can be represented by the following function:
ei x (7000 - 3 x E), where i = 1,2, E is the combined effort by fi shermen 1 and 2; E = e1 +e2 and ei is the individual e¤ort of every fisherman i. The fi xed cost of fi shing is $600 and the variable cost is 20e^2
i . What
is the optimal e¤ort level?
This question was asked on Dec 07, 2012 and answered on Dec 07, 2012.
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